St. John’s supply chain management startup Milk Moovement is opening an office in Minneapolis to capitalize on the lucrative Midwestern dairy industry.

CEO Robert Forsythe said in an interview that Milk Moovement signed its first American client in Wisconsin about two months ago. As part of that deal, the company’s software is now in use at over 200 dairy farms.

Milk Moovement’s technology allows participants in the milk supply chain to track and assess raw milk. Its cloud-based reporting system gives farmers, dairy boards, cooperatives and other industry players real-time production data, logistics tracking services and an automated invoice generation feature.

“We’ve identified for a while that we had to place a big focus on the United States market,” said Forsythe. “Revenue potential is astronomical in comparison to Canada. But also, openness to innovation and change is quite a bit higher down there.”

Instead of selling to individual farmers, Milk Moovement focuses its business development efforts on dairy farming co-ops and other large industry organizations. Its software is now used on every dairy farm in both Prince Edward Island and Newfoundland and Labrador, thanks to deals with provincial farming collectives.

Minneapolis is within driving distance of five key American dairy states, where the largest industry associations and dairy processors are located, as well as major food companies like Cargill.

But Forsythe said selling to large American organizations via remote communications or short business trips is difficult because the dairy industry places a high degree of emphasis on personal relationships.

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To facilitate that relationship-building, Forsythe and co-founder Jon King will move to Minneapolis in September to launch their company’s first foreign branch, complementing their existing Newfoundland and Halifax offices.

They also plan to roll out a marketing campaign focused heavily on informational content derived from Milk Moovement’s internal data about the dairy industry.

“We have some pretty radical ideas about the dairy industry and where it needs to go,” said Forsythe. “However, there’s still a large group in the population that I don’t think is even aware what needs to change or even aware of what the possibilities can be.”

The content will be published first on social media and Milk Moovement’s website, with vlogs and webinars possibly coming in six months to a year.

The company has previously completed the Thrive accelerator in California and the Food-X accelerator in New York, both of which led to American media coverage that helped raise its profile with potential buyers.

The result is that Milk Moovement has reached about $500,000 in annual recurring revenue and is targeting $1 million by the end of 2020.

The annual values of its contracts are reliably well into the six figures and customers usually sign on for several years at a time, suggesting the team will only need to close a small number of deals to reach the $1 million threshold.

To help with the American expansion, Forsythe and King plan to hire a salesperson to work out of the Midwest office with them.

The salesperson will be one of five or six new staff members that they hope to hire in the next several months, who will join the existing team of eight employees spread between the three offices.

The tight-knit nature of the dairy industry, though, means that the Minneapolis salesperson will need to have existing relationships with producers in the area.

“We want that person to be someone who’s worked in the Midwest,” said Forsythe. “It’s really someone who’s been entrenched in the Midwest dairy industry, who knows the people, knows who to call and is a welcome person to show up.”

Milk Moovement is in the process of raising a US$750,000 seed round, about half of which is committed so far.

Forsythe said that despite COVID-19, venture capitalists seem keen to do deals. But he suspects that the pandemic is leading some investors to begin talks that they ultimately might not follow through on.

The unusual funding conditions have not dampened his outlook for Milk Moovement: “I think we’re very fortunate to be in an industry that’s growing right now, and we feel very fortunate to be having success. And we’re looking for the best and the brightest talent to help us along the way.”